Global Ag News for Dec 8th

 TODAY – EIA WEEKLY ENERGY REPORT

Wheat prices overnight are down 5 1/2 in SRW, down 5 1/2 in HRW, down 3 1/2 in HRS; Corn is down 3/4; Soybeans down 8 1/4; Soymeal down $0.13; Soyoil down 1.56.

For the week so far wheat prices are down 1/2 in SRW, down 2 1/4 in HRW, up 12 1/4 in HRS; Corn is up 1 1/4; Soybeans down 25 1/4; Soymeal down $0.78; Soyoil down 1.51. For the month to date wheat prices are up 15 3/4 in SRW, down 1/4 in HRW, up 23 in HRS; Corn is up 17 3/4; Soybeans up 24 3/4; Soymeal up $6.90; Soyoil up 0.23.

Chinese Ag futures (MAY 22) Soybeans down 65 yuan ; Soymeal down 23; Soyoil down 56; Palm oil down 90; Corn up 20 — Malasyian Palm is down 88. Malaysian palm oil prices overnight were down 88 ringgit (-1.79%) at 4841.

There were changes in registrations (-1 Soyoil, ). Registration total: 1,861 SRW Wheat contracts; 100 Oats; 2 Corn; 266 Soybeans; 232 Soyoil; 1 Soymeal; 108 HRW Wheat.

Preliminary changes in futures Open Interest as of December 7 were: SRW Wheat up 373 contracts, HRW Wheat down 1,783, Corn up 7,933, Soybeans down 6,343, Soymeal down 5,085, Soyoil up 632.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers northeast Tuesday, mostly dry Wednesday-Friday, isolated showers Saturday. Temperatures near to below normal Tuesday-Thursday, near to above normal Friday-Saturday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Saturday, mostly north. Temperatures near normal through Saturday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry Tuesday. Isolated showers west Wednesday-Saturday. Temperatures near to above normal Tuesday-Friday, near to below normal Saturday. La Pampa, Southern Buenos Aires Forecast: Mostly dry Tuesday. Isolated showers Wednesday-Saturday. Temperatures near to above normal Tuesday-Wednesday, near to below normal Thursday-Friday, near normal Saturday.

The player sheet for Dec. 7 had funds: net buyers of 2,000 contracts of  SRW wheat, buyers of 2,000 corn, buyers of 5,500 soybeans, sellers of 3,000 soymeal, and  sellers of 3,500 soyoil.

TENDERS

• CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 130,000 tonnes of animal feed corn expected to be sourced from Argentina in an international tender which closed on Tuesday
• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 123,000 tonnes of U.S. soybeans to unknown destinations for delivery in the 2021/22 marketing year that began Sept. 1.
• WHEAT AND BARLEY TENDER: Importers in the Philippines are tendering to purchase a total of up to 300,000 tonnes of milling wheat and animal feed wheat plus about 125,000 tonnes of feed barley
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 260,312 tonnes of food-quality wheat from the United States and Canada in regular tenders that will close on Dec. 9.

PENDING TENDERS

• WHEAT TENDER: An Ethiopian government agency issued an international tender to buy about 400,000 tonnes of milling wheat
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• BARLEY TENDER: Jordan’s state grains buyer issued a new international tender to purchase 120,000 tonnes of animal feed barley
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins
• WHEAT AND BARLEY TENDER: apan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 80,000 tonnes of feed wheat and 100,000 tonnes of feed barley to be loaded by Feb. 8, 2022 and arrive in Japan by March 10, via a simultaneous buy and sell (SBS) auction that will be held on Dec. 15.

ETHANOL: U.S. Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Dec. 3 are based on nine analyst estimates compiled by Bloomberg.

• Production seen higher than last week at 1.046m b/d
• Stockpile avg est. 20.431m bbl vs 20.301m a week ago

 EPA to Propose Slashing Biofuel Quotas in U.S. Gasoline

The Biden administration will propose retroactively cutting biofuel quotas for 2020 and modestly increasing them for next year, in a blow to producers of ethanol and biodiesel, according to people familiar with the matter.

• Under an EPA proposal set to be announced Tuesday, fuel refiners and importers would be required to use 18.52b gal of renewable fuel in 2021 and 20.77b gal next year
  • For 2022, as much as 15b gal could be fulfilled from conventional renewable fuels, such as corn-based ethanol, with remaining 5.77b gal coming from advanced biofuel
  • For 2021, conventional renewable fuels would be capped at 13.32b gal, alongside a quota for 5.2b gal of advanced biofuel
• The total renewable fuel quota for 2020 would be retroactively revised down to 17.13b gal, from a 20.09b-gal quota established in Dec. 2019
  • For 2020, as much as 12.5b gal could be fulfilled from conventional renewable fuels; advanced biofuel quota would be 4.63b gal
• Proposed quotas are part of a package of policy moves being announced Tuesday; agency is also set to propose changes that could accelerate production of next-generation biofuels processed at multiple facilities, among other actions
• NOTE: Refiners and their congressional allies had pushed for reductions to address the pandemic-related drop in fuel demand, while biofuel advocates argued robust quotas were essential to maintain progress advancing low-carbon renewable fuels

Biden to Cut Biofuel Targets in Blow to Agriculture Industry

• Agency to deny dozens of refineries waivers from the quotas
• Administration seeks to retroactively reduce 2020 targets

The Biden administration is proposing new requirements for blending biofuel into gasoline and diesel that will deal a blow to ethanol producers and the agriculture industry.

The U.S. Environmental Protection Agency on Tuesday will call for cutting biofuel-blending quotas retroactively for 2020, the people said, while outlining lower-than-expected targets for this year and a modest increase in 2022.

In a sign the Biden administration is trying to minimize disruption in both agriculture and oil sectors, the EPA also is set to soften the blow to ethanol producers by moving to reject bids by dozens of small refineries seeking waivers from 2019-2021 renewable fuel quotas, according to the people, who asked not to be named because the information isn’t public.

The biofuel requirements come as President Joe Biden battles gasoline prices now hovering around a seven-year high and inflationary pressures that threaten to undercut the U.S. economic recovery. The move follows months of deliberations over how to set the targets amid a pandemic-spurred drop in fuel demand and a surge in costs, while still encouraging greater use of biofuels made from corn and soy.

The measure responds to some concerns raised by oil refiners and their allies on Capitol Hill, who had argued reductions were critical to address a decline in fuel sales and compensate for 2020 targets they said exceeded blending capacity.

A spokesman for the EPA declined to comment on the targets.

EPA has already said it is proposing to delay the deadlines for refiners to prove they have complied with quotas for 2020 and 2021.

For 2020, the EPA is taking the unusual step of retroactively revising down the total renewable fuel quota to 17.13 billion gallons, from a 20.09 billion-gallon target established in December 2019, according to the people.

Tradable biofuel compliance credits that refiners use to prove they have fulfilled quotas can be used over two years. A reduction of the 2020 quotas could prevent refiners from dipping aggressively into stockpiles of previously generated credits to satisfy the targets they said were too high.

For the current year, the overall target would be 18.52 billion gallons. The agency is proposing a modest increase for 2022 with 20.77 billion gallons required.

The proposed increase for next year will do little to assuage renewable fuel advocates, who have warned the Biden administration that cuts could “destroy a decade of progress on low-carbon biofuels” and violate Biden’s campaign promises to support the mandate.

Oil refiners slammed the move and said it would raise costs for consumers while failing to provide environmental benefits.

Under the 16-year-old federal Renewable Fuel Standard, fuel importers and refiners must blend biofuels themselves or buy tradable credits that track consumption of the plant-based alternatives. The cost of those credits, known as renewable identification numbers or RINs, has swung wildly this year.

RINs tracking ethanol consumption tripled in value from early November, when Biden secured the presidency, through early June. Since then, the credits have tumbled by more than half from an all-time high amid speculation the new administration might not be as friendly to biofuels as initially expected.

Credits tracking ethanol consumption for 2021 were down 11% Tuesday. Shares of refiners including HollyFrontier Corp. and CVR Energy were up modestly.

Congressional Democrats from Pennsylvania have argued that high RIN prices were particularly hurting some independent refiners, which lack their own blending facilities to generate credits. Those refiners were spending more on RIN purchases than other operational costs, the lawmakers said.

The administration also is taking steps that could accelerate the production of advanced, next-generation biofuels by allowing RIN credits to go toward more products. Under proposed changes, biofuels that are processed across two locations — such as bio-oils from wood residue or other feedstocks generated at one facility and then made later into finished fuel at another site — would be eligible.

Brazil’s Parana Soybean Crop Conditions Worse Amid Dry Weather

November dryness, heat have stressed crops in Parana state after above-average precipitation aided plantings in October, Marcelo Garrido, an economist at the state’s rural economics department, says in telephone interview.

EU Soft-Wheat Exports Up 11% Y/y; French Sales Figures Jump

Soft-wheat shipments during the season that began July 1 reached 12.8m tons as of Dec. 5, versus 11.5m tons in a similar period a year earlier, the European Commission said Tuesday on its website.

U.S. Urea Dips Below World Prices, Market Yawns

A $53 drop in U.S. urea prices isn’t indicative of a top in nitrogen’s rally. Global urea markets stayed firm, despite the U.S. drop. Brazil urea futures were also firm and retained their premium to the U.S. Brazil offers an easy outlet for producers looking to move tons as it consumes urea nearly year-round. Middle Eastern urea producers are nearly sold out for January, leaving few supply sources available for those looking to buy urea. A spring pre-pay ammonia off priced at $1,575 per short ton indicates a higher 96-cents-a-pound 1Q nitrogen value. At parity with a normal spread, Corn Belt urea should trade near $925/st this spring. December is normally a quiet time for U.S. urea buyers who step in during 1Q ahead of the 2Q season.

French Winter-Grain Area Down 0.4% Y/y, Rapeseed Rises: Govt

• French farmers are seen planting 6.8m hectares of winter-grain crops for the 2022 season, the country’s agriculture ministry said Tuesday on its website
• That’s down 0.4% from last year, but 1.6% above the five-year average
  • Soft-wheat area estimated at 4.92m hectares, versus 4.96m last year
  • Durum-wheat area at 279k hectares, versus 284k last year
  • Barley area at 1.23m hectares, versus 1.2m last year
• Winter rapeseed area seen at 1.1m hectares, up “significantly” from a year earlier
  • Plantings were 981k hectares last year, and five-year average is 1.24m hectares
• The 2021 soft-wheat harvest is estimated at 35.4m tons, versus a November estimate for 35.5m tons
• Corn-crop estimate raised to 15.4m tons, from 14.8m tons, as more area was shifted from forage to grain

AgriMer Boosts French Wheat Stockpiles Est. 11% on Lower Exports

French soft-wheat stockpiles at the end of the 2021-22 season are now seen at 3.51m tons, up from a November estimate for 3.17m tons, crops office FranceAgriMer said in a report Wednesday.

Plenty of Fats, Oils to Meet Biofuel Demand Through 2030: Group

An expected surge in demand for ingredients to make climate-friendly diesel can be met with the estimated U.S. supply of animal fats, greases and vegetable oils through 2030 without encroaching on food resources, according to a study commissioned by the Advanced Biofuels Association.

Top Buyer India to Import Record Soybean Oil as Premium Shrinks

• Purchases may soar to 525,000 tons in December, Patel predicts
• Palm oil imports to rebound from a four-month low in November

India’s soybean oil imports may jump to a record in December as the commodity’s falling premium over palm oil is prompting traders and processors to boost inbound shipments, according to veteran trader G.G. Patel.

Imports are expected to rise to as much as 525,000 tons from an estimated 478,000 tons in November, said Patel, managing partner of GGN Research. That’s 63% higher than the 322,809 tons India bought in December 2020.

Soybean oil has become relatively less expensive to palm oil, with their price gap shrinking more than 85% from a record in the middle of this year. Palm oil has surged 44% since a low in June amid a severe labor shortage in Malaysia that’s crimped production, while the oil extracted from crushed soybeans has lost about 10% during the same period.

India is the top buyer of vegetable oils, importing soybean oil mainly from Argentina and Brazil, and palm oil from Indonesia and Malaysia.

Palm oil purchases will probably hit 600,000 tons in December, up from 542,000 tons the previous month but down from 770,392 tons a year earlier, Patel said. There are some hurdles to imports as domestic prices are currently 3,000 to 3,500 rupees ($40 to $46) a ton cheaper than global levels, he added.

Another reason for India’s weaker palm oil buying is high domestic stockpiles, after a surge in imports between August and October, according to Sandeep Bajoria, chief executive officer of Mumbai-based Sunvin Group.

Purchases will pick up from February when the winter season ends, Bajoria said. Palm oil consumption tends to fall during the colder months in India as the tropical oil solidifies at lower temperatures.

India’s sunflower oil imports may rise to 225,000 tons in December from an estimated 125,000 tons a month earlier, Patel estimates.

India has no plans to allow extra soymeal imports – trade minister

India has no current plans to allow extra imports of soymeal, a key animal feed, its trade minister Piyush Goyal said on Tuesday, despite calls from livestock breeders for more shipments to cool high prices.

Last month, the All India Poultry Breeders Association asked the government to allow imports of 550,000 tonnes of the feedstuff.

“There is no proposal with the government regarding the imports,” Goyal said in a tweet, referring to overseas purchases of soymeal.

The government in August relaxed import rules to allow its first shipments of 1.2 million tonnes of genetically modified (GM) soymeal to help the poultry industry after animal feed prices tripled in a year to a record high. (Full Story)

But traders managed to sign deals to import only about 650,000 tonnes of soymeal against the permitted 1.2 million before the deadline for overseas purchases expired on Oct. 31.

The government takes into account the impact on local prices before entertaining requests for more imports of soymeal to avoid losses to farmers.

California Sees No State Water, Threatening 2022 Crop Production

• Farmers brace for another dry year after record-breaking 2021
• Processed tomato prices increased 22% in three-month period

California farmers who struggled to make it through record-breaking drought and heat in 2021 are bracing for another bad year, this time without any additional water from the state.

The state said it won’t give any water from the State Water Project to farmers unless drought conditions improve. That could mean even higher food prices at a time when consumers are struggling with an ongoing pandemic and inflation across the board.

“The carryover water that got a lot of farmers through this past year is gone,” said Mike Wade, executive director at the California Farm Water Coalition. Farmers will either have to pump groundwater, if they can, “or they’re going to be fallowing a lot of farm land,” he said.

Drought conditions in 2021 already contributed to rising prices for some food products, Wade said. Prices for tomato paste and crushed tomatoes, for example, increased 22% from January to April.

This is the first time since a devastating drought in 2014 that California’s farmers have gotten a zero allotment for water from the state, said Ellen Hanak, vice president and director of the Public Policy Institute of California Water Policy Center. The state’s more than 69,000 farms and ranches supply over a third of U.S. vegetables and two-thirds of its fruit. The annual almond harvest accounts for about 80% of global production.

Farmers are now hoping for rain and snow. California has had only one major storm this season, Wade said, but the state needs at least four more by spring in order to make a dent in the water deficit.

“We’re not holding our breath,” he said.

U.S. Agriculture Sentiment Fell in November: Purdue Univ.

The Purdue University/CME Group’s agricultural sentiment index fell to 116 points in Nov. from 121 in Oct., according to a survey of 400 agricultural producers.

• That is the lowest reading since May 2020
• Current conditions component declined by 7 points from Oct.
• Future expectations down by 4 points